In the latest episode of BossCast, Geeta Nanda OBE, chief executive of Metropolitan Thames Valley and chair of the G15 of London’s largest housing associations, and Harry Downes, managing director of Fizzy Living, sat down with Blackstock Consulting’s Andrew Teacher to reflect on their ‘fabulous’ ten year build-to-rent partnership following the news that Metropolitan has divested its remaining stake in Fizzy Living to Greystar.
Housing association and build-to-rent pioneer Metropolitan Thames Valley recently announced the sale of its final stake in Fizzy Living, to real estate manager and developer Greystar.
Launched nearly a decade ago in 2012, Fizzy Living was the first build-to-rent branded professionally managed service of its kind in the UK, designed specifically to service the needs of young professionals.
Reflecting on the thought process behind setting up Fizzy Living post-financial crisis, Geeta Nanda points to a gap in the market for good quality, professionally-managed accommodation.
“We were thinking, ‘where is the market not serving its customers?’, and absolutely, you could see at that time, young professionals were putting the biggest amount of their income out and getting the worst service you can imagine.”
According to Nanda, an eventual exit had always been part of the plan. “When we set up Fizzy Living we always knew there would be a point at which it would flourish and grow in another vehicle. We were there to set up a market-rented sector that didn’t really exist. There are points at which you have to look at it and say, ‘Can this grow better, further, elsewhere?, and that’s something housing associations are good at.”
With the UK’s build-to-rent sector now firmly established compared to ten years ago, Nanda feels that now is the right time to relinquish Metropolitan Thames Valley’s final stake. The latest BPF and Savills figures put BTR homes at a total 195,598 at the end of 2021’s second quarter.
Metropolitan Thames Valley has nonetheless left Fizzy in an undeniably strong position, with 96 percent occupancy following the pandemic. As Fizzy’s Harry Downes explains, this is owed in part to Fizzy Living’s strong relationship with its residents. “We have a community in every building. That absolutely came to the fore during the pandemic. Residents could speak to the building manager (‘BOB’) or their neighbours, and we did special, distanced events for them. We’ve always been pet-friendly - at one stage over 50 percent of our tenants had pets.”
Proceeds from the sale will be ploughed back into the housing association’s plans to build more affordable and sustainable homes. As Nanda explains, “Any surplus we make goes right back into the organisation to support our activities for affordable housing, which has to have a subsidy. It goes nowhere else.”
Metropolitan Thames Valley, which was originally set up to provide housing for the Windrush generation in the 1960s, recently announced that it would spend £2.1 billion over the next five years on delivering 6,000 new homes. Spanning London, the South East, the East Midlands and East of England, 80 percent of these new homes will be affordable or shared ownership tenures.
All the new homes will meet at least an Energy Performance Certificate (EPC) B standard or better, while its existing homes will be upgraded to meet a minimum of EPC C by 2030 - a vital move given that housing currently accounts for more than a third of the UK’s carbon emissions.
The housing association also recently raised £250 million of new funding through a 15-year sustainable bond issue to build more new homes and tackle the climate emergency. Explaining what a ‘green’ bond means, Nanda says “There’s a whole framework there by which you have to fulfil criteria to show your ESG credentials. A lot of people talk about the environmental, but we also have great social and governance credentials. We measure it - we’ve got a tool which is highly recognised around social value - and if you think about the suppliers that we work with, and the maintenance we do, and how we keep people out of hospital, all of those investments we can measure up, and our social investment comes to over £713 million a year.”
According to Downes, the original decision to partner with then-Thames Valley Housing was a no-brainer. Asked what makes Nanda and her team stand out, Downes replies “The job of managing a property, of collecting the rent, of making sure it all works and paying the bills. They just do that, that just happens. I learned that they had systems in place that meant it just really worked well. The governance, the absolute depth of knowledge of the industry, and the fact that every box was ticked - and those were boxes that I didn’t even know existed when I joined.”
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